Big Game Hunter

Fundraiser Terry
McAuliffe knew how to bag big donors for President Clinton, but has the stalker
now become the prey?

by J. Jennings Moss
February, 1997

McAuliffe Inc.

The Boy Wonder Comes of Age (An Image Timeline)

On his 40th birthday in early February, Terry McAuliffe
gathered a dozen or so friends and family members at the venerable Hay-Adams
Hotel for a Beltway power broker's dream party. Before the guests had even
finished their appetizers, President Bill Clinton had crossed the street from
the White House and then lingered to eat, drink, and sing tunes from
"Hello, Dolly!" with McAuliffe's 74-year-old mother, Millie. Soon
after, Vice President Al Gore, fresh off a plane from Chicago, stopped by to
pay his respects.

McAuliffe had every reason to celebrate. The chief
fundraiser for the president's re-election campaign, he had rounded up record
funds in record time to pave the way for a Democratic victory in 1996. Only a
few weeks earlier, he had co-chaired Clinton's Inauguration Day festivities, waving
to spectators along the parade route from the lead car, the one just in front
of the first family.

But the birthday party also was set amid a tense reality.
Reporters were daily uncovering pieces of the mounting Democratic campaign finance
scandals. Up to that point, McAuliffe had avoided mention in those stories. But
within two weeks of his bash, he was identified as the man who started the
White House kaffeeklatsches for major party contributors and as the memo writer
who sparked the president's decision to "rent out" the Lincoln
Bedroom. (An eventual summons from congressional investigators seems likely.)

McAuliffe may also have other worries. According to a
congressional source, the Department of Justice is considering whether
McAuliffe exploited his political connections to profit from at least one
government-related business deal (see McAuliffe Inc.).

None of this has dimmed McAuliffe's star, however. He's
adored within Democratic Party circles -- Gore has called him "the
greatest fundraiser in the history of the universe." And McAuliffe seems
to concur. "Let me tell you," he says. "I can motivate. I can
sell. I can get people pumped up."

McAuliffe's history confirms that he can indeed sell -- though
what exactly he's selling is problematic. He came of professional and political
age as the Democratic Party was deciding that in order to beat the Republicans,
it had to focus on fundraising. McAuliffe learned the finer arts of the trade
at the elbow of former Rep. Tony Coelho (D-Calif.). ("You could sense
about him that here was a guy who's going to be a superstar," Coelho now
says.) Although Coelho left the House in disgrace after a big donor helped him
structure a sweetheart junk bond deal, McAuliffe has continued to play the game
unfazed. "I would think for a majority of the big donors, they want to be
part of the action," McAuliffe told Mother Jones. "It's fun, it's
exciting, it's sexy, it's got a lot of things to it that they want to be part
of. Nobody comes in and says, 'Hey, for this, I'll give you that,' because you'd
throw them out of the office."

But even members of Democratic Party inner circles find the
level to which McAuliffe elevated the pursuit of cash distasteful. Still, the
real issue is that his bosses love the guy. From the White House's perspective,
McAuliffe did a "spectacular" job in 1996 -- and nothing improper in
carrying it out. "If he's able to raise money in larger and larger
increments and do it within the law, then that's the whole object of the
game," says a senior White House official.

McAuliffe is certainly not the first fundraiser to prescribe
that lawmakers meet with financial supporters, but in auctioning off access to
the White House, he does appear to have taken the practice to unprecedented lengths.
On a personal level, the fuzziness of his ethics has blurred the boundaries between
his political and business dealings. And in conversations with Mother Jones,
McAuliffe has had a hard time sticking to the same story.

McAuliffe's rise has been swift and methodical. He earned a
reputation for tireless campaign work on behalf of Jimmy Carter's failed 1980
re-election campaign, which he joined right after finishing up classes at
Catholic University. It was then that he first caught the attention of
political reporters, who are fond of repeating the tale of how McAuliffe wrestled
a 260-pound alligator just to get a $5,000 contribution.

He then attended Georgetown law school, graduating in

1984. Along the way he registered as a lobbyist, a career
path he soon decided wasn't for him, and eventually returned to raising money
for the Democrats. That's when he fell under the tutelage of Coelho, who tapped
him as Democratic Congressional Campaign Committee finance chairman in 1986.
(When asked about the DCCC donor whose financial help subsequently disgraced
Coelho, McAuliffe told reporters he'd only met the fellow once.) And
McAuliffe's Coelho connection has continued -- the two were accused of
influence peddling in two 1995 lawsuits that were later settled (see McAuliffe
Inc.).

Throughout all McAuliffe's fundraising work, he remained a
volunteer, and he made money by forming the Washington law and lobbying firm
McAuliffe, Kelly -- though he says he himself never lobbied. In 1987, McAuliffe
became finance chief for Rep. Richard Gephardt's presidential primary campaign,
and, shortly before, he had served on the board of the Federal City National
Bank, which loaned the Gephardt campaign a total of $1.4 million. While he
worked for the Missouri Democrat, his business and political ties came under
scrutiny when it appeared that some of the loans were unsecured, a charge later
denied by McAuliffe and Federal City. McAuliffe told reporters at the time that
he had abstained from voting on the approval of the loans.

After a stint raising money for Clinton's 1992 campaign, McAuliffe
again returned to the private sector -- sort

of. Clinton named him commissioner general (a title equal in
rank to that of ambassador) for a 1993 technology exposition in South Korea. In
that position, McAuliffe convinced American businesses to contribute $3 million
so the United States could be represented at the exposition. The biggest contributor
was Amway, usually a staunch Republican supporter, which gave $500,000 to the
effort.

By March 1994, McAuliffe says, he had left his law and lobbying
firm to become Democratic National Committee (DNC) finance chair. And even
though he rented office space from the firm and regularly received buyout
payments for his share of the partnership, he claims he no longer had any financial
stake in the firm, renamed Raffaelli, Spees, Springer & Smith.

Meanwhile, the firm enjoyed a surge in foreign clients. During
the Korean exposition, McAuliffe had met with members of the Korean Foreign
Trade Association. When Raffaelli, Spees landed the KFTA account in September 1994,
other lobbyists complained that the South Koreans had chosen the firm because of
McAuliffe's ties to Clinton.

In light of the Democrats' foreign money campaign scandals,
some of McAuliffe's other business ties now look questionable. Several months
before McAuliffe left to run the DNC, for example, his firm was one of many to represent
the Taipei Economic and Cultural Representative Office (TECRO), the unofficial
embassy of Taiwan. Illegal foreign campaign contributions from Taiwan have been
a focal point in the current investigation of Democratic fundraising. Although
TECRO has not been implicated in any illegal fundraising activities, in early
March, the Los Angeles Times cited an unidentified Taiwanese official who
claims TECRO brokered contributions from Chinese-Americans to candidates of
both parties.

McAuliffe also has a remote connection to the infamous April
1996 DNC fundraiser at the Hsi Lai Buddhist Temple, which raised $140,000 from
questionable sources. The Los Angeles temple is represented by McAuliffe's
former West Coast partner and fellow Democratic fundraiser Peter Kelly. Unlike
his former partner, McAuliffe has so far managed to avoid the taint of the
foreign money scandals.

In 1994, two days after Christmas, McAuliffe shared a private
breakfast with President Clinton to discuss the Democratic misfortunes in the
midterm elections. The party had suffered its worst beating in 40 years when it
lost control of both the House and the Senate, and Clinton seemed doomed to
only one term. But McAuliffe was reassuring. All the president had to do, he
said, was meet personally with his financial supporters in order to fill a war
chest that would bankroll political resurrection. The people-hungry Clinton
readily agreed.

About a week later, McAuliffe sent a memo to Clinton's scheduler
asking for three dates when the president could dine or drink coffee with major
backers. That memo, part of a trove of documents kept by then-Deputy Chief of
Staff Harold Ickes and later handed over to Hill investigators, included the
names of the Democrats' top 10 backers. It also prompted Clinton to scribble
the now-infamous word "overnights" next to the 10 names, and to add,
"get other names at 100,000 or more, 50,000 or more."

When asked about the memo, McAuliffe had a simple response:
He said he had nothing to do with the Lincoln Bedroom stays. As for the
potentially most troubling aspect of the fundraising controversy -- that
foreign money was channeled into DNC coffers -- McAuliffe strenuously
maintained he was uninvolved. "I ran Clinton/Gore in 1995," he said.
"All the problems that have occurred [at the DNC] have occurred on another
watch."

McAuliffe's assertion, which he would later recant in significant
ways, is crucial to understanding the current campaign finance scandals. In the
1970s, Congress limited individual contributions to candidates, but it left unrestricted
the amounts donors could give to the parties, as long as the gifts were not
targeted to specific candidates. Among the issues surrounding the 1996
elections has been the charge that the Clinton/Gore campaign effectively
directed fundraising and tactical spending at the DNC.

McAuliffe's claims to the contrary strike some as insincere.
"It was one fundraising system with two roads that ran from it," says
a longtime Democratic operative with close ties to McAuliffe. "Terry was
in charge of the fundraising system for the president. It doesn't matter if you
call it the DNC or you call it Clinton/Gore. Everything was so tightly
coordinated."

McAuliffe has also argued that he was not involved in the
campaign during most of 1996, when many apparent fundraising abuses -- such as the
hundreds of thousands of dollars solicited from questionable sources by DNC
fundraiser John Huang – took place.

"From November [1995] until September [1996] I was
gone," McAuliffe stressed during a first interview with Mother Jones in
early March. He said he left when the Clinton/Gore committee reached the
maximum total in contributions allowed by law. Miami lawyer Marvin Rosen took
over fundraising at the DNC shortly thereafter, and McAuliffe says he didn't
return until September to help the DNC make a final fundraising push. "It's
like my mother thinks I hired John Huang," McAuliffe said. "I've never
met John Huang."

But McAuliffe was contradicting his own statements from
other

interviews, in which he said he had met Huang briefly at a
1996 dinner. Also, Huang and his wife, Jane, contributed $25,000 to the DNC
while McAuliffe was DNC finance chairman in 1994.

More importantly, McAuliffe's denial that he did any
fundraising for either Clinton/Gore or the DNC during that troubled period of
1996 just doesn't hold. "He moved over to take control of the DNC
fundraising" early in 1996, says Dick Morris, who was Clinton's chief
political adviser until Morris' marital infidelities with a Washington
prostitute ended the association.

And Morris ought to know. He was the one charged with
figuring out ways to spend the money McAuliffe brought in. The two men never
took part in the same meetings, according to Morris, but they did meet
privately on a few occasions. When pushed about McAuliffe's political role in
1996, Morris backpedals, saying it was only his perception that McAuliffe became
a force within the DNC: "I don't know what McAuliffe did in '96. I had heard
they would move him over to the DNC fundraising operation."

Clinton/Gore campaign manager Peter Knight also says McAuliffe
played a big role in 1996 for the president's campaign, calling him "a major
player for us, not on the money side, but on the political side." McAuliffe,
Knight says, made appearances on behalf of the president and mobilized business
support for the Democratic ticket.

And one day after McAuliffe first spoke to Mother Jones, the
Philadelphia Inquirer reported that Philadelphia philanthropist Peter L.
Buttenwieser had received a call from McAuliffe asking for a $50,000
contribution that would guarantee him a seat at the president's table at a June
17, 1996, lunch. Not only did Buttenwieser say no, but later wrote a letter to
McAuliffe, saying: "I do not want to 'work' my way into a luncheon with
the president. It's no fun that way and it's not right." (McAuliffe has
denied the interaction with Buttenwieser, calling him a "kook.")

In a second interview with Mother Jones, McAuliffe changes
his story, acknowledging that he raised money in the spring and summer of 1996.
He estimates he raised $3-$5 million for the Democrats and was present at two
intimate White House lunches during the period, blaming his involvement on
big-money contributors who didn't want to deal with anybody else. "People
knew I was close to the president," he shrugs. "Probably closer than most
people. So they wanted to be with me."

At this point, the motivational pitchman who can "sell"
is replaced by an operative professing fundraising fatigue. "I'm tired of
the dough," he says. "I don't ever want to do it again." For the
next two years, McAuliffe says, he'll concentrate on his home-building
business, American Heritage Homes.

But he has no plans to retire from political life. Already

he is said to be enjoying entreaties from likely primary
opponents Gore and Gephardt. "I will be very active in the 2000
election," McAuliffe says. "Let's just leave it at that."

J. Jennings Moss is a Washington, D.C., writer who has been
Washington correspondent for The Advocate and covered politics for the
Washington Times.